Home insurance exclusions: What your policy won’t cover

No matter what type of home insurance policy you buy, there’s a list of common problems (called “perils”) that most insurance companies will not cover.

Knowledge is your best defense when you have a possible home insurance claim. Knowing exactly what your homeowners insurance policy covers and excludes also helps you determine whether you want to purchase additional coverage.

For example, do you know which of these problems is not covered by a home insurance policy?

A car careens off the street and crashes through your living room wall.

A skunk gets into your house and stinks up everything you own.

A foreign army invades the United States, destroying your house in the process.

Answer: You’re not covered if an invading army destroys your house (acts of war are excluded), but you are covered if your house is hit by a car or perfumed by a skunk.

Things covered by home insurance policies

There are a variety of standard homeowners insurance policies. The most basic policy, HO-1, covers only a few perils and insurance companies have stopped selling it in most states. The HO-2, generally called the “broad form,” covers 16 perils. They are:

Fire or lightning.

Windstorm or hail.

Explosion.

Riot or civil commotion.

Damage caused by aircraft.

Damage caused by vehicles.

Smoke.

Vandalism or malicious mischief.

Theft.

Volcanic eruption.

Falling objects.

Weight of ice, snow or sleet which causes damage to a building.

Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protective sprinkler system or from a household appliance.

Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system or an air conditioning or automatic fire-protective system.

Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system or of a household appliance.

Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component).

An HO-3 policy is often called a “special form” because it covers everything except certain perils outlined in the policy. It is the most popular type of policy. The standard HO-3 policy contains these exclusions:

Ordinance or law, such as demolition or construction required to bring your house up to code.

Earth movement, such as earthquakes, shockwaves, sinkholes, landslides and mudflows.

Water damage, such as floods, sewer back-ups and water that seeps through the foundation.

Power failure.

Neglect, meaning you failed to take reasonable means to save your property during or after a loss.

War, including undeclared war and civil war.

Nuclear hazard.

Intentional loss, meaning something you did on purpose with the intent to cause a loss.

Governmental action, such as the destruction, confiscation or seizure of covered property by any governmental or public authority.

There are two important questions to ask your home insurance agent: What losses does your policy cover and not cover? And what additional coverage might you need given your situation?

Examples of home insurance exclusions

Since policies can differ by state and insurance company, the only way to know what your exclusions are is to read your own policy. If you come across something you don’t understand, ask your agent or insurance company about it. Here are some scenarios that address home insurance exclusions.

Q: What happens if a wild animal sneaks into my home and wreaks havoc?
A: You’re covered. Technically, the animal vandalized your home. Vandalism is covered under most standard policies.

Q: What if I need a building code upgrade?
A: Not covered. If your home suffers damage and you want to upgrade it when you repair, you’ll have to do it at your own expense. A standard home insurance policy pays only for what you originally insured. However, some insurance companies sell a “rebuilding ordinance or law coverage” rider. This extra coverage pays a specific amount toward upgrade costs — but under this type of policy you have to suffer a disaster before it will pay to upgrade.

Q: My basement flooded and most of my possessions have been destroyed. Am I covered?
A: No. For protection against floods, you’ll need flood insurance. Also, water coming into your home from backed-up sewers is typically excluded, but you can purchase optional coverage to protect yourself from this.

Q: Can I make an insurance claim for my home’s value plummeting after the city built a prison in the area?
A: No. Selling cost is not insurable. Your home is insured for the amount you’ll need to rebuild it and replace the contents.

Q: Am I covered for damage to my home that resulted from a power outage?
A: Each policy contains coverage for the loss of food in your refrigerator and freezer, usually up to $500. Electronics, such as your computer, are not covered under standard home insurance policies if there’s a surge when the power comes back on, unless the surge is due to a covered peril such as lightning.

Q: A company dumped pollutants into a stream that runs through my property. Am I covered?
A: No. If something like this were to happen, the party responsible would be liable for your clean-up bill — probably after a lengthy court battle. But some insurance policies contain coverage to clean up oil spilled in your house by the oil company that fills your tank.

Q: Suppose lightning strikes a power line leading into my home. Are my damaged possessions covered?
A: Yes. Any damage caused by lightning — such as fire or damage to electronics from a surge — is covered.

Q: One of my appliances caught fire and caused my hot water heater to explode. Am I covered?
A: You’re covered. This is an instance of what insurance companies call a “sudden and accidental loss.”

Q: I’m running a small business from my home. Is my computer and office equipment covered?
A: If you run a business out of your home, you should be insured separately. A simple home office might require only an endorsement to a home insurance policy, but a hair salon, day care or construction business poses greater potential liability and requires a separate business insurance policy. See our business insurance section.

Freaky incidents and home insurance exclusions

Q: A religious phenomenon damaged my home. Now what?
A: You’re covered. Every now and then you’ll hear about something unusual, such as a house where oil is pouring out of the walls for no apparent reason and the Virgin Mary appears in the oil. If that happens to you, and you make a claim for the damage done to your walls, you’re covered.

Q: What if a plane, train or automobile crashes into my living room?
A: You’re covered. Cars and trains fall under coverage for damage from vehicles hitting your house, while airplane damage is paid for by coverage for objects falling out of the sky.

Q: Suppose an antigovernment militia invades my neighborhood. Is my destroyed home covered?
A: If the United States government determines that it was not an act of war, you should be covered. Acts of terrorism are covered, but not acts of war.

Q: A nuclear power plant problem irradiated my home. Are my home and possessions covered?
A: No. Nuclear accidents are a standard exclusion. You’d have to go to the power company that owns the nuclear plant and get it to pay up.

Q: My house slid down a cliff. Am I covered?
A: No. If you build or buy a house on a cliff, be aware of the risks involved. A standard home insurance policy won’t pay if your house slides down because of a landslide or any other reason. That’s considered “earth movement” and is excluded. Your best bet is to check with your agent about getting coverage for such an event. (If you live in California, a California Earthquake Authority policy will cover earth movement only if it is seismically induced, so if you live on a cliff overlooking the Pacific, you will need additional coverage.)

Q: My house, which was built over an old coal mine, was swallowed by a sinkhole. Am I covered?
A: No, this is also excluded as “earth movement.” This is a problem for homeowners in Coal Belt states, including Illinois, Ohio, Pennsylvania and West Virginia, but random sinkholes have appeared all over the country. While a home insurance policy doesn’t cover sinkholes due to old mines, you can purchase coverage (known as mine subsidence insurance), usually from your state’s Mine Subsidence Authority. Check with your state’s department of insurance or your insurance agent.

If you’ve suffered damage to your home, business, investment property, HOA, or Condo Association, a public insurance adjuster can help you get the most out of your policy as you work to recover. However, be an informed consumer and be certain to familiarize yourself with key terminology before beginning the process.

Actual Cash Value – Actual cash value refers to the monetary value of an item that has been lost or damaged. It takes into consideration depreciation and wear.

Replacement Cost – The actual cost to replace a damaged item. This does not take into account depreciation or damage. Your independent licensed public adjuster can help calculate these figures.

Period of Interruption – Whether it’s from an earthquake or fire, the period of interruption refers to the amount of time it takes to get your home or business back in previously working order.

Exclusion – An exclusion refers to items or causes that are not covered by insurance. There are often exclusions for flood and fire, since they are covered by separate insurance.

Public adjusters are state licensed insurance adjusters that assist policy holders with claims regarding property.

These experts can be found in most parts of the United States. Most people need a public adjuster to aid them when a disaster happens, such as a fire an earthquake or flood, that has caused damage to their home or business.

The adjuster can assist the policy holder by helping them get the right sum of money that is due to them.

This money comes from the insurance company with which the individual or family has a policy.

There is a certain process involved when people try to settle with an insurance company after a home fire or other property loss. Steps need to be taken in a certain order and information needs to be conveyed in a clear and concise way with the insurance carrier.

When the public adjuster or professional firm works to prepare your case, it is important to give all the details regarding personal loss, the coverage you have in place, and the cost of repairing or replacing lost possessions.

Policy holders do have certain civil rights and protection from insurance associations. There are files put in place to keep records of your insurance policy.

This way the licensed public adjuster can make certain each policy holder gets the insurance money they deserve for their claimed damages. Public Adjusters are contracted to maximize the recovery from insurance companies for all property losses.

By speaking with a public adjuster in your area, you can get further information on insurance plans and policies for home coverage. It is always smart to take care of this ahead of time so that you do not have to worry when something occurs.

Your property has suffered an insurance loss due to fire, a water pipe burst, hail damage or something else. NOW WHAT?

Don’t let one disaster out of your control lead to others.

Should an event occur that requires filing an insurance claim, the responsibility of preparing the claims fall completely on the insured not the insurance company. If you don’t seek professional help, critical information may be missed that can negatively impact the final settlement you will receive. AJR is serious about examining your policy for the “fine print” to make sure you take advantage of all your coverages.

For over a quarter of a century AJR has been in this field representing a variety of companies and individuals with their insurance claims. Our clients’ claims have been settled to their satisfaction as you can see by the testimonials we have received. http://ajrpa.com

Our modest contingency fee is calculated on the settlement you receive , never higher than 10%. We are paid after we have assisted and helped you maximize your recovery from the insurance company.

The next time you find yourself in a situation to file a property claim, don’t think twice. Immediately contact AJR to help assist navigating the insurance process to maximize your recovery. When the dust settles you’ll be glad you called us.

Most people who have a claim have no idea how to prepare and adjust it. They more or less rely on their “insurance adjuster” to do that for them. BIG MISTAKE! What you must understand is, it is the “insurance adjusters” job to make company inspired settlements with policyholders, most of whom lack the fundamental information and adjusting skills to be on a level playing field with the adjuster. A NAPIA (National Association of Public Insurance Adjusters) Adjuster can help you level the field.

Knowledge is leverage. The more you know, the more power you have, and insurance adjusters are well trained to cut corners and save their company money and, more and more, look for ways to avoid paying claims. You need someone as well trained in your corner looking out for your interests. The objective in adjusting should be to get as good a result as possible, as quickly as possible, as trouble free as possible. Most policyholders will continue their fate of dealing ineffectively due to the fact that they lack ability, information, and understanding.

To adjust is to negotiate. An adjuster is a negotiator. Usually, only the person representing the insurance company is considered the adjuster, and the policyholder receives his/her adjustment, as previously stated, from a company inspired adjuster. In order to arrive at an adjusted settlement, each side has its own needs to satisfy. The less you know, the more likely you are to be forced to meet the needs of the insurance company. You must know your needs! You must know your rights!

A Public Adjuster can help you with both of these. If you don’t know what to expect and how to get it, you may become overwhelmed and give in too easily.

No one knows the outcome of an adjustment beforehand. Therefore, it is impossible to anticipate to what extent either party will give in to the needs of the other. Bargaining power becomes the main ingredient in adjusting. It usually comes about naturally as facts come to the surface. Adjusting is a matter of give and take, and unless you are dealing from a position of strength and knowledge like a Public Adjuster can offer, you may be forced to give too much.

Insurance adjusters facing a knowledgeable public adjuster usually enter on a more cooperative basis, and there is a strong likelihood that each will strive for common goals.

Usually a policyholder has to deal with a claim at a time following a disaster. Psychologically, most people are not up to the task under these circumstances. It is very common to see people in a state of shock, confusion and helplessness. A professional public adjuster will be emotionally level and competent.

The time of a personal disaster is not the time to be thinking about all of this for the first time. Think about it now and take comfort in the knowledge that a Public Adjuster can be there to protect your interest if indeed the unthinkable happens to you.

Will you be able to rebuild if your home or business is damaged or destroyed by fire? How long will it take you to bounce back if you are wiped out by flood or hammered by a haboob? Will you recover quickly from the losses you suffer from vandalism or theft?

You might be unpleasantly surprised more than once if tragedy strikes where you live or work –first by the brutal force of Mother Nature and later by the realization that you are unprepared to do anything but accept whatever compensation your insurance company offers. You can avoid this problem by hiring a public insurance adjuster, a person with knowledge and experience to help you obtain the most favorable settlement possible – someone who represents you and not your insurance company.

“We serve as the advocate for the policyholder, but it’s important to remember the policyholder controls the settlement. We advise and assist,” says Bruce Horowitz, president of AJR Public Adjusters, who has over 1/4 century experience in this field

In addition to estimating how much damage has been done, AJR also helps file the paperwork to complete the claim and negotiates with the insurance company. AJR charges its clients a percentage of the settlement, typically around 10 percent.

To find out more about how AJR Public Adjusters can help you recover from a natural disaster or other property loss by helping you obtain and maximize your settlement from your insurance company, call (602) 795-5227, email Bruce@ajrpa.com or visit http://www.betterclaimresults.com

As the colder weather approaches this week, it is time to think about the damage that it can cause to your home. Reducing the chance for damage reduces the chance of needing to file a homeowners insurance claim. A few simple, routine home maintenance activities will go a long way toward helping you avoid costly problems.

MAXIMIZE ENERGY SAVINGS

Check windows and doors for leaks that may compromise heating efficiency.

Look closely at window and door frames for cracks or feel for cool air coming in.

Seal leaks or cracks with caulk, weather stripping or door sweeps.

If necessary, purchase a plastic sheeting kit and place plastic around the windows to keep heat from escaping.

Install a programmable thermostat if you don’t already have one.

Inspect heating ducts and vents, and dust off or clear away anything that may have gotten into them over the summer months.

If your windows or doors are aged and in bad shape, consider installing newer models designed to maximize energy efficiency.

PREPARE YOUR HEATING SYSTEM

Heating and cooling account for 47% of all energy costs in the home. You need to make sure your furnace and insulation are working as efficiently as possible.

Have a professional tune your furnace in order to reduce temperature variations, improve air quality and protect against dangerous carbon monoxide levels.

Change the air filter in your furnace every month during the winter.

Have your chimney checked by a professional chimney sweep who can evaluate the condition of your chimney and clean it if necessary.

Be sure the fireplace damper closes tightly, to prevent drafts.

Clean and clear your fireplace before lighting the first fire of the season.

INSPECT YOUR ROOF

Cracked, broken or missing roof shingles leave your home exposed to the elements and can cause a great deal of damage, especially during the winter months.